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Six reasons behind Ramdev, Balkrishna and Patanjali's success

Six reasons behind Ramdev, Balkrishna and Patanjali's success

While Ramdev is busy propagating Yoga and Ayurveda to create a market for the products, Balkrishna is creating the products.  Their partnership has been phenomenal, but there are also many other reasons behind the success story.

Baba Ramdev (L) and Acharya Balkrishna. Baba Ramdev (L) and Acharya Balkrishna.

In 1995, Ramdev was a little known yoga teacher in Haridwar when his close associate, Acharya Balkrishna, and him set up Divya Pharmacy - under the aegis of Ramdev 's guru, Swami Shankar Dev's, ashram - to make Ayurvedic and herbal medicines. The medicines proved so popular that Ramdev and Balkrishna sought to scale and diversify into other products. But that proved difficult since Divya Pharmacy was registered under a trust.

At the same time, with Ramdev's popularity soaring, substantial funds began to come in - sizeable loans from the likes of NRIs Sarwan and Sunita Poddar, as well as locals such as Govind Agarwal - which in turn helped to get bank loans. Thus was born Patanjali Ayurved as a private company in 2006, which has since rolled out a range of products - in healthcare, hair care, dental care, toiletries, food and more - at breathtaking speed.

"When Divya Pharmacy was set up, we hardly had the money to pay for the registration," Ramdev told Business Today last year. "For the first three years, till 1998, we distributed the medicines free. From buying the raw materials to grinding and mixing, we did everything ourselves," he added.

Today, Balkrishna stands among the richest men in India and Patanjali as one of the main players in the Indian fast moving consumer goods (FMCG) sector. While Ramdev is busy propagating Yoga and Ayurveda to create a market for the products, Balkrishna is creating the products.  Their partnership has been phenomenal, but there are also many other reasons behind the success story:

Media attention: Ramdev rose to national fame as a yoga guru through his programmes on TV channels - Sanskar in 2001 and Aastha from 2003. He readily acknowledges the role of the media in his rise. "Patanjali ko bananey mein ek se 10 per cent humara role hai, baaki role media ka hai (My own role in the rise of Patanjali is just one to 10 per cent, the rest of the credit goes to the media)," he told Business Today website.

Smart pricing: Yet another reason for Patanjali's success is the thrift it practices. "Our profit margins are miniscule because the main aim is not to make profit," said Ramdev. "Profiting from patients is against the philosophy of Ayurveda, so we aim at minimum profit from our health products. Our input costs are low because we source directly from farmers, avoiding middlemen." Salaries are also modest. "Humare yahaan crore ki salary paane waala koi vyakti nahee hai, (There is no one in our company who is paid crores as salary)," he added. "Most companies have administrative costs of around 10 per cent of their revenue, but in our case it is just two per cent."

Retail outlets: Initially, Patanjali shunned the conventional distribution network, preferring to rely on its own channels of super distributors, distributors, Chikitsalayas (franchise dispensaries) and Arogya Kendras (health centres which sell Ayurvedic remedies). Once it turned to retail outlets from 2011, revenue began to multiply manifold.

Variety of products: Already, a few Patanjali products have made major inroads - apart from desi ghee, its toothpaste Dant Kranti, for instance, launched in March 2010, brought in revenues of Rs 200 crore in 2014/15. Patanjali has also ventured out to produce many other new items that were mostly produced by foreign companies in recent months. Patanjali also sells toothpastes, unpolished pulses and detergents.

Swadeshi factor:
Patanjali is happy to co-exist with indigenous companies, multinational ones are a different matter. "Humara ek simple funda hai: MNCs ko replace karna (We have a simple principle: we want to replace MNCs)," said Ramdev.

"We don't want to put anyone down, but we would like to instil swadeshi pride so that Indian money does not go out of the country." He is aware that the competition is gunning for him.

"The MNC mindset is such that whenever an Indian does anything, MNCs think we are competing with them," he said. "MNCs are creating special war rooms to combat Patanjali. We are not into any such war rooms. We don't analyse other companies' strategies or conduct market surveys and feasibility studies. It is only when people ask for cheap and healthy options that we try to respond."

Advertising:
Patanjali's own advertising was limited in the past, but has increased considerably of late, with ads appearing on general entertainment TV channels (GECs) such as Star and Zee. The company has also reached out to regional Southern channels.